2023 (4) TMI 1111 - AT - Income Tax

Validity of Revision u/s 263 - assessee had failed to prove genuineness and creditworthiness of all these heads of expenses and credits - revision proceedings have been initiated on the basis of audit party - HELD THAT - We find no force in assessee s instant first and foremost legal argument as there is no such embargo in section 263 regarding exercise of revision jurisdiction on the basis of any proposal coming from the field authorities. We further note that there is no indication either in the PCIT s section 263 twin show cause notices or in his detailed discussion that he had simply accepted the proposal than applying his independent mind on the facts and circumstances of the case. Once there is no statutory restriction placed in exercise of section 263 jurisdiction at the prescribed authorities instance, we must adopt stricter construction going by Commissioner of Customs vs. Dilip Kumar Co 2018 (7) TMI 1826 - SUPREME COURT to interpret the impugned jurisdiction in wide terms only. The assessee fails in his instant first and foremost argument. We find from the perusal of case files that the learned counsel could not place any material before us during the course of arguments that the Assessing Officer had carried out all his details enquiries whilst disallowing/adding the relevant heads of expenses and credits (supra) in part than in entirety once it was a fit case wherein he had already held this taxpayer to have failed in proving identity, genuineness and creditworthiness by way of filing cogent evidence. Assessment framed without carrying out detailed enquiries and verifications is indeed an erroneous one causing prejudice to the interest of Revenue which duly entitles the prescribed authority to assume its section and pass necessary orders thereupon as it thinks fit. We thus uphold the PCIT s revision directions herein in the given facts and circumstances of the case. We find no merit in the assessee s instant last argument as well in light of hon ble apex court s decision in CIT vs. Shri Arbuda Mills Ltd. 1996 (1) TMI 11 - SUPREME COURT that the above exclusion clause regarding prescribed authority exercising section 263 revision jurisdiction does extends to such matters as had not been considered and decided in such appeal . We make it clear that there is no material before us which could indicate the CIT(A) to have considered and decided the assessee s grievance to this extent. We thus reject the assessee s instant argument as well. PCIT has wrongly directed the Assessing Officer to finalise proceedings u/s 144 only whilst passing his consequential order - We find no substance in the assessee s instant concluding arguments as well once it has come on record that the Assessing Officer had himself decided all these corresponding issues after holding that the assessee had failed to prove genuineness and creditworthiness of all these heads of expenses and credits; as the case may be, by filing cogent supportive evidence. We therefore hold that there is no prejudice caused to the assessee in light of PCIT s directions to the Assessing Officer u/s 144. The assessee fails in all her arguments thereof. The PCIT s revision order under challenge is upheld. Decided against assessee.

Summary

Issues involved:
The judgment involves issues related to the correctness of best judgment assessment, initiation of revision proceedings under section 263, and the sustainability of the PCIT's action under challenge.

Best Judgment Assessment:
The assessee challenged the correctness of the Assessing Officer's best judgment assessment, which included disallowances and additions to the income. The Assessing Officer completed the assessment due to the assessee's lack of response to notices. The PCIT upheld the assessment, citing failure to prove expenses and credits, leading to prejudice to the Revenue's interest. The PCIT's revision directions were supported by legal precedents emphasizing the need for detailed inquiries and verifications in assessments.

Initiation of Revision Proceedings:
The PCIT initiated revision proceedings under section 263 based on show cause notices, which the assessee contested. The assessee argued against the initiation of proceedings based on field authorities' proposals, citing legal cases. However, the tribunal found no statutory restriction on the PCIT's exercise of revision jurisdiction, emphasizing the wide interpretation of the law. The PCIT's actions were deemed valid, as there was no evidence of a lack of independent application of mind.

Sustainability of PCIT's Action:
The assessee contended that the PCIT's action under challenge was not sustainable due to a pending appeal before the CIT(A). Legal cases were cited to support this argument. However, the tribunal rejected this argument, stating that the exclusion clause regarding the exercise of revision jurisdiction extends to matters not considered and decided in the appeal. Since there was no indication that the CIT(A) had addressed the specific grievance, the PCIT's action was upheld. Additionally, the assessee's claim of suffering injustice due to the PCIT's directions to finalize proceedings under section 144 was dismissed, as the Assessing Officer had already made decisions based on the lack of evidence provided by the assessee.

This judgment highlights the importance of thorough inquiries and verifications in assessments to avoid prejudice to the Revenue's interest. It also clarifies the jurisdiction of the PCIT in initiating revision proceedings and the impact of pending appeals on such actions. The tribunal upheld the PCIT's revision directions, emphasizing the need for proper substantiation of expenses and credits in assessments.